SunPower results slip slightly in the second quarter, amid trend of strong growth

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SunPower has released its second quarter 2014 results, reporting a 12% year-over-year fall in revenues during the second quarter to US$508 million, with operating margin falling to a slim 1.3%.

However, despite a dip this quarter in GAAP measures, SunPower doing well by other metrics. The company is running its factories at full capacity, with its work on its 350 MW Fab 4 manufacturing facility underway, and plans for a fifth factory double that size.

Additionally, SunPower’s project business is going strong. Just two days prior to releasing second quarter results, SunPower announced the beginning of construction on a the 135 MW Quinto solar project in California.

SunPower is currently building the 579 MW Solar Star project, the world’s largest solar project, and installed the millionth module at the plant in May. The company is also on track to complete the world’s largest merchant solar plant at 70 MW in Chile by the end of 2014.

Another factor in the slight dip in SunPower’s results may be its choice to hold more of the projects it builds, as opposed to selling them. “Project values are significantly higher than sale at notice to proceed,” notes SunPower President and CEO Tom Werner.

SunPower reached 605 MW of projects held on its balance sheet during the quarter, and residential and commercial projects represent nearly half of this capacity. All are located in the United States and South Africa.

Unlike other developers like SunEdison and Abnegoa, SunPower is not yet proceeding with a public vehicle to hold those projects. “We have flexibility and time is on our side,” notes Werner. “As more yieldcos come online, they buy up projects, and our projects get more valuable.”

SunPower is also showing success with its residential leasing business, and days before the earnings release closed on a deal with Hannon Armstrong to provide US$44.5 million in non-recourse debt for leases. The company booked another 12 MW of leases during the quarter, bringing SunPower to a total of 184 MW of leased systems to date, representing $683 million in nominal contracted payments.

During its second quarter results call, SunPower hinted at a deal with multiple automotive manufacturers, which it plans to announce in coming days. This deal will be in addition to its existing relationships with Ford and Nissan.

In addition to its diversity across market segments, SunPower remains geographically diversified. While the majority of SunPower’s revenues during the quarter were in the Americas, the company also reported strong sales into Japan, which rose to 26% of shipment volume during the quarter.

Finally, SunPower is developing its C7 low-concentrating photovoltaic product in China, and says that it shipped 15 MW of cell packages for C7 systems during the quarter.